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Maryland Gov. Larry Hogan leaves following a news conference in Annapolis, Md., Monday, Nov. 16, 2020.

(The Center Square) – Seven Maryland businesses have been awarded $500,000 grants to develop and expand across the state's Opportunity Zones.

An Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they are in a low-income census tract with an individual poverty rate of at least 20% and median family income no greater than 80% of the area median.

According to Frank Dickson, director of strategic business initiatives at Maryland’s Department of Housing and Community Development, the purpose of the Opportunity Zone is to "provide capital gains incentives to private investors to invest capital into areas that are distressed as defined by low income for the citizens living in those areas."

The zones are an economic development tool designed to spur economic development and job creation in distressed communities in Maryland.

“Our state has been working hard to supercharge investment and make Maryland’s 149 Opportunity Zones the most competitive ones in America,” Gov. Larry Hogan said in a news release. “Maryland Opportunity Zone funds have already received more than $333 million of equity investments, and we continue to see expansion of businesses, new jobs, and much-needed affordable housing in these areas.”

This is the second round of grants administered this year, with the first batch of funding from Maryland Department of Housing and Community Development’s Neighborhood BusinessWorks Program being disbursed in January.

Opportunity Zone grants are invested into real estate projects – commercial mixed-use projects, grocery stores, community centers, apartments, and other businesses located in the tract.

"For real estate investment, the investment project must rehabilitate at least 100% of the building cost," Dickson said. "For an investment into a business, the business must have 50% of their sales coming from the Opportunity Zone, or 50% of their payroll must be reporting to the Opportunity Zone facility location. The investment must be held for at least 10 years for the private investor to receive the bulk of the incentive."